Kerala Finance Minister Balagopal expresses concern about proposed GST reforms

Thiruvanthapuram, Aug 26 (PT) Kerala Finance Minister K N Balagopal on Tuesday expressed concern about the reported GST reform proposals by the Centre and urged the union government to take steps to protect the revenue of the states in this regard.

He said the state is not against tax cuts proposed under the reforms, but stressed that its benefits should reach common people.

"When you reduce taxes, it is important that the revenue of states be protected, otherwise welfare schemes will be affected," he told reporters here.

A fresh dip of Rs 8,000-Rs 9,000 crore is likely to occur in the tax revenue of Kerala besides the existing slashes, he said.

The minister said the proposed reforms may negatively impact various social welfare measures, including the LIFE housing project and government's free insurance scheme, which is benefited by over 42 lakh families.

The decreasing revenue of the state government is also likely to affect the salary of employees and the running of schools and hospitals, he said.

Pointing out that there has already been a shortfall of over Rs 24,000 crore in the state's revenue, he sought to know what would happen if an additional Rs 10,000 crore is decreased in this regard.

Balagopal said the exact figures of revenue loss are yet to be available, but it is certain that the proposed reforms would impact all sectors of the state.

The finance minister said the issue would be raised in the upcoming GST council meeting scheduled to be held next month.

He, however, said he does not believe that any sudden action would be taken to address the state's concern even if it is raised in the GST Council.

Not just Kerala, but all other states, including the BJP-ruled ones, would be affected due to the proposed reforms, the minister further said.

The greatest concern is that the proposed reforms may impact public finances in the worst manner post independence, he said.

Stating that the total GST revenue at the national level was Rs 22.08 lakh crore during the 2024-25 fiscal, he said it is likely to dip by Rs four lakh crore in the coming period.

Naturally, it would impact the distribution of money to the common people through the state government, he said.

The state minister explained that even if the union government suffers any revenue loss due to the proposed reforms, it has many other sources of income to overcome that.

"But, the condition of states is not the same. If no compensation is provided (for the revenue loss), it will gravely impact the states," he said.

If common people can enjoy the benefits of tax cut, it is a good thing, but steps should be taken to protect the revenue of state governments to ensure that it does not impact their exchequer, Balagopal added.

"We are not saying that tax should not be cut, but its benefits should reach common people," he said.

He reiterated that 95 per cent of the state's revenue income is earmarked for the disbursal of salary of employees and pension.

While responding to the allegations raised by Leader of Opposition V D Satheesan against the corrupt practices by some GST officials in the state, the minister said a comprehensive probe would be carried out after collecting details including from him and stringent measures would be taken if the charges are proved to be correct. PTI LGK KH